Academic Commons Search Resultshttp://academiccommons.columbia.edu/catalog.rss?f%5Bgenre_facet%5D%5B%5D=Working+papers&f%5Bsubject_facet%5D%5B%5D=Banking&q=&rows=500&sort=record_creation_date+desc
Academic Commons Search Resultsen-usMonetary Policy and Transmission of Bubbleshttp://academiccommons.columbia.edu/catalog/ac:158323
Sakuragawa, Masaya; Shinada, Naokihttp://hdl.handle.net/10022/AC:P:19522Thu, 28 Mar 2013 00:00:00 +0000The aim of this paper is to investigate the optimal monetary policy when bubbles boost and burst. The monetary policy in the form of open market operation has real effects, that is, influences the growth in investment and the size of bubbles. The central bank faces a trade-off between stimulating investment and appreciating bubbles. The optimal policy is contingent on the state of bubbles. When bubbles arise, the central bank may maintain or gives up easing, depending on how it puts weight on the state of the bursting of bubbles, while when bubbles burst, the central bank takes an easing policy. The optimal policy is the same irrespective of whether foreign capital inflows are allowed for unless capital markets are severely restricted.Economics, Asian studies, Banking, FinanceCenter on Japanese Economy and BusinessWorking papersJapan Post Bank: Problematic Issueshttp://academiccommons.columbia.edu/catalog/ac:158300
Lincoln, Edward J.http://hdl.handle.net/10022/AC:P:19520Thu, 28 Mar 2013 00:00:00 +0000Japan, like many countries, has long offered savings deposits through the postal system. That system has undergone some reform over the past dozen years, and beginning in 2007 the system was to undergo privatization, with Japan Post Bank eventually becoming an independent entity. A new law passed in 2012 has stalled the privatization process. Regardless of how the issue of privatization plays out, the existence of a savings bank embedded within the postal system raises a number of troubling issues. This essay addresses five of those problems: a level playing field, market power, cross subsidization, social policy, and risk or inefficiency. These issues concern the fairness of competition within the banking industry, future financial stability of the Japan Post Bank, and broader economic inefficiency within the Japanese economy. This essay argues that government ownership of Japan Post Bank is unjustified on economic or social grounds. Complete privatization should resolve some of the problems, especially that of a level playing field. But issues of economic inefficiency and future financial stability could remain even after privatization.Economics, Commerce-Business, Asian studies, BankingCenter on Japanese Economy and BusinessWorking papersHow much do Bank Shocks Affect Investment? Evidence from Matched Bank-Firm Loan Datahttp://academiccommons.columbia.edu/catalog/ac:157856
Amiti, Mary; Weinstein, David E.http://hdl.handle.net/10022/AC:P:19387Thu, 21 Mar 2013 00:00:00 +0000We show that supply-side financial shocks have a large impact on firms’ investment. We do this by developing a new methodology to separate firm credit shocks from loan supply shocks using a vast sample of matched bank-firm lending data. We decompose loan movements in Japan for the period 1990 to 2010 into bank, firm, industry, and common shocks. The high degree of financial institution concentration means that individual banks are large relative to the size of the economy, which creates a role for granular shocks as in Gabaix (2011). As a result, idiosyncratic bank shocks—i.e., movements in bank loan supply net of borrower characteristics and general credit conditions—can have large impacts on aggregate loan supply and investment. We show that these idiosyncratic bank shocks explain 40 percent of aggregate loan and investment fluctuations.Economics, Bankingdew35EconomicsWorking papersThe Real Effects of Asset Market Bubbles: Loan- and Firm-Level Evidence of a Lending Channelhttp://academiccommons.columbia.edu/catalog/ac:99694
Gan, Jiehttp://hdl.handle.net/10022/AC:P:15452Fri, 26 Oct 2012 00:00:00 +0000This paper studies how a shock to the financial health of banks, caused by a decline in the asset markets, affects the real economy. The land-market collapse in Japan provides an ideal testing field in separating the impact of a loan supply shock from demand shocks. I find that banks with greater real estate exposure have to reduce lending. Firms' investment and market valuation are negatively associated with their top lender's real estate exposure. The lending channel is economically important: it accounts for one-third of lending contraction, one-fifth of the decline in investment, and a quarter of value loss.Finance, BankingCenter on Japanese Economy and BusinessWorking papersFinancial Control through Japan's Main Bank System and the Japanese Accounting System: The Past and the Futurehttp://academiccommons.columbia.edu/catalog/ac:153768
Okada, Elliehttp://hdl.handle.net/10022/AC:P:15064Tue, 23 Oct 2012 00:00:00 +0000This paper aims to 1) compare financial controls through the main bank system to those of capital markets, 2) analyze the relationship between financial controls through the main bank system and the traditional Japanese accounting practices, and 3) analyze appropriate changes for financial controls and related accounting practices. This paper defines a main bank as an investor, which controls the management of a company by possessing the residual right of control. This paper shows that a main bank attaches the most importance to refundable earnings, as a creditor, and firm value, as a stockholder. This paper argues that it is important to strengthen the power of stockholders in the financial control system in present day Japan where financial controls through the main bank system no longer functions effectively. For this purpose, the most desired reform in the accounting system is the disclosure of future cash flows and the attribution of accurate stockholder equity amounts. It is also desired that Japanese management should make more of an effort to show an accurate and fair reflection of performance and financial position to stockholders in the market. This change may lead to increased efficiency of management, and at the same time, restore the good name of Japanese enterprises that fell in international public’s estimation because of corruption and window-dressing.Finance, BankingCenter on Japanese Economy and BusinessWorking papersThe European Investment Bank and SMEs: Key Lessons for Latin America and the Caribbeanhttp://academiccommons.columbia.edu/catalog/ac:153547
Griffith-Jones, Stephany; Tyson, Judith; Calice, Pietrohttp://hdl.handle.net/10022/AC:P:14987Wed, 17 Oct 2012 00:00:00 +0000This paper discusses the engagement of the European Investment Bank Group (EIB Group) with the financing and support of SMEs, both within the European Union (EU) as well as EU Candidate Countries and the Balkans. Indeed, lending and providing financial support to SMEs is one of the key core objectives of the EIB Group. The main focus of the paper is to describe and analyse the practises and experiences of the EIB Group in this field, to discuss the key lessons and to make policy recommendations to be considered within the Latin America and Caribbean (LAC) context. The large role played by the EIB Group in financing SMEs in Europe shows the significance of the role the public sector needs to, and can, play in providing direct financial support to SMEs - as well as helping catalyse private financing to them, for example via bank guarantees and other risk-sharing instruments - given the large market imperfections and gaps in private financial markets for SMEs, particularly credit markets. This is the case in general, but has become particularly evident in the crisis, where the EIB Group has played an important countercyclical role in credit provision, in the face of sharply falling private credit to SMEs. It is noteworthy that the valuable role that public financial institutions need to play has been increasingly recognized since the crisis at the level of multilateral development banks (MDBs) and regional development banks (RDBs). It is important that similar conclusions are also applied to national development banks.Finance, Bankingsgj2108Initiative for Policy DialogueWorking papersNice to Be on the A-Listhttp://academiccommons.columbia.edu/catalog/ac:151710
Hamao, Yasushi; Kutsuna, Kenji; Peek, Joehttp://hdl.handle.net/10022/AC:P:14404Wed, 15 Aug 2012 00:00:00 +0000This study addresses an important shortcoming of most of the existing literature on credit availability by including a set of unlisted firms (which are the firms most likely to be bank dependent) in the analysis, and by investigating differences between the treatment of listed and unlisted firms by their lenders. We find evidence consistent with evergreening behavior by banks toward listed firms, consistent with prior studies. However, the more striking result is that banks appear to treat the smaller, unlisted firms differently, being much less willing to engage in evergreening behavior for these borrowers. The difference in treatment of unlisted firms relative to listed firms does not appear to be related to systematic differences in size between the two groups of firms. Thus, it appears that the distinguishing characteristic that determines whether a bank might evergreen loans to a firm is whether or not the firm is listed. Furthermore, this effect appears to be stronger for those firms listed on the more prestigious Tokyo Stock Exchange compared to firms listed on other exchanges; that is, being on the list (being listed) matters, and being on the A-list matters even more. Moreover, among listed firms, for which data on ownership by banks are available, a higher concentration of ownership of the firm by either the main bank or the firm’s top three lenders increases the likelihood of the firm obtaining increased loans, suggesting that bank ownership of the firm stimulates evergreening behavior to a greater degree.BankingCenter on Japanese Economy and BusinessWorking papersRelationship Banking and the Pricing of Financial Serviceshttp://academiccommons.columbia.edu/catalog/ac:137002
Calomiris, Charles W.; Pornrojnangkool, Thanavuthttp://hdl.handle.net/10022/AC:P:10884Wed, 10 Aug 2011 00:00:00 +0000We investigate how banking relationships that combine lending and underwriting services affect the terms of lending, through both loan supply- and loan demand-side effects, and the underwriting costs of debt and equity issues. We capture and control for firm characteristics, including differences in the sequences of firm financing decisions (which we argue are likely to capture important cross-sectional heterogeneity, and which previously have been ignored in the literature). We construct a structural model of lending, which separately identifies loan supply and loan demand. Our approach results in significant improvement in the explanatory power of our regressions when compared to prior studies. We find no evidence that universal banks under-price loans to win underwriting business. Instead, we find that universal banks charge premiums for loans and underwriting services to extract value from combined lending and underwriting relationships. We also find that universal banks (as opposed to stand alone investment banks) enjoy cost advantages in both lending and underwriting, irrespective of relationship benefits. Part of the advantage borrowers may enjoy from bundling products may be a form of liquidity risk insurance, which is manifested in a reduced demand for lines of credit. We also find evidence of a "road show" effect; firms that engage in debt underwritings enjoy loan pricing discounts on the loans that are negotiated at times close to the debt underwritings.Finance, Bankingcc374Business, International and Public AffairsWorking papersResolving the Puzzle of the Underissuance of National Bank Noteshttp://academiccommons.columbia.edu/catalog/ac:137005
Calomiris, Charles W.; Mason, Joseph R.http://hdl.handle.net/10022/AC:P:10885Wed, 10 Aug 2011 00:00:00 +0000The puzzle of underissuance of national bank notes disappears when one disaggregates data, takes account of regulatory limits, and considers differences in opportunity costs. Banks with poor lending opportunities maximized their issuance. Other banks chose to limit issuance. Redemption costs do not explain cross-sectional variation in issuance and the observed relationship between note issuance and excess reserves is inconsistent with the redemption risk hypothesis of underissuance. National banks did not enter primarily to issue national bank notes, and a "pure arbitrage" strategy of chartering a national bank only to issue national bank notes would not have been profitable. Indeed, new entrants issued less while banks exiting were often maximum issuers. Economies of scope between note issuing and deposit banking included shared overhead costs and the ability to reduce costs of mandatory minimum reserve and capital requirements.Finance, Bankingcc374Business, International and Public AffairsWorking papersThe World Bank loans to Italy and the history of postwar development policieshttp://academiccommons.columbia.edu/catalog/ac:130387
Alacevich, Michelehttp://hdl.handle.net/10022/AC:P:10034Fri, 25 Mar 2011 00:00:00 +0000Banking, International relations, European history, Modern history, Economic historyItalian AcademyWorking papersLoan interruptus : the World Bank, reconstruction and development in Italy, 1947-53http://academiccommons.columbia.edu/catalog/ac:130363
Alacevich, Michelehttp://hdl.handle.net/10022/AC:P:10026Fri, 25 Mar 2011 00:00:00 +0000Economic history, Banking, International relations, European history, Modern historyItalian AcademyWorking papersCentral-bank communication and policy effectivenesshttp://academiccommons.columbia.edu/catalog/ac:115197
Woodford, Michaelhttp://hdl.handle.net/10022/AC:P:461Fri, 25 Mar 2011 00:00:00 +0000Bankingmw2230EconomicsWorking papersDeposit insurance, institutions and bank interest rateshttp://academiccommons.columbia.edu/catalog/ac:116049
Carapella, Francesca; Di Giorgio, Giorgiohttp://hdl.handle.net/10022/AC:P:497Thu, 24 Mar 2011 00:00:00 +0000Many recent institutional reforms of the financial system have relied on the introduction of an explicit scheme of Deposit Insurance. This instrument aims at two main targets, contributing to systemic stability and protecting depositors. However it may also affect the interest rate spread in the banking system, which can be viewed as an indicator of market power in this financial segment. This paper provides an empirical investigation of the effect of deposit insurance and other institutional and economic variables on bank interest rates across countries. We find that deposit insurance increases the lending borrowing spread in banking. The main effect seems to arise not from the deposit side though, but from an increase in the lending rate. We interpret this result as evidence of the presence of moral hazard problems related to this instrument. We also find that higher quality of institutions is associated with lower spreads, thus contributing to eroding sources of market power in the banking sector.Banking, FinanceEconomicsWorking papersRational Herding and The Spatial Clustering of Bank Branches: An Empirical Analysishttp://academiccommons.columbia.edu/catalog/ac:100427
Chang, Angela; Chaudhuri, Shubham; Jayaratne, Jithhttp://hdl.handle.net/10022/AC:P:15712Thu, 03 Mar 2011 00:00:00 +0000Bank Branches in NYC tend to be spatial clustered. For instance, of the 221 branches that were opened in NYC between July 1990 and June 1995-, 181 or 82 percent were opened in census tracts that already had at least one other branch. A number of recent theoretical papers have highlighted the possibility of rational herding in various arenas of economic activity. This paper explores empirically whether the apparent clustering of bank branches can be at least partially attributed to rational herding by banks. We find that even after controlling for the expected profitability of operating a branch in an area, branch openings follow other, existing branches. Moreover, such band wagon behavior appears to reduce branch profits. These findings, combined, suggest that herd behavior may be a factor in the branch location decisions of banks.Economics, Bankingsc301EconomicsWorking papersDeregulation of the Japanese Financial Markets and the Role of Japanese Bankshttp://academiccommons.columbia.edu/catalog/ac:123031
Hotta, Kensukehttp://hdl.handle.net/10022/AC:P:94Wed, 16 Feb 2011 00:00:00 +0000Economics, Commerce-Business, Banking, FinanceCenter on Japanese Economy and BusinessWorking papersDeveloping Country Debt and the Market Value of Large Commercial Bankshttp://academiccommons.columbia.edu/catalog/ac:123894
Kyle, Steven C.; Sachs, Jeffrey D.http://hdl.handle.net/10022/AC:P:8231Tue, 29 Sep 2009 00:00:00 +0000The effect on commercial banks of exposure to large amounts of developing country debt has been a topic of increasing concern in recent years. Fear of default on the part of the debtor countries has led to fears for the solvency of the creditor banks since in many cases the total of outstanding exposure to risky debtors exceeds the entire capital base of the banks involved. The paper presents a first effort towards measuring the effects of LDC debt exposure on the market value of large commercial value banks in the United States. Our results indicate that exposure to developing country debt has exerted a measurable and significant negative effect on the ratio of market to book value for these banks.Banking, Financejs2201Economics, Health Policy and Management, Earth Institute, International and Public AffairsWorking papers